It might not be hard to believe, but it turns out that a real estate investment company wasn't really producing the 60 percent returns it advertised after the real estate bubble burst.

The Department of Justice alleges Michael Stewart, 66, of Phoenix and John Packard, 63, of Long Beach, California, perpetrated a Ponzi scheme that robbed private investors and banks of $110 million.

According to the DOJ, Stewart and Packard started Pacific Property Assets (PPA) in 1999 with the purpose of buying and selling (or refinancing) apartment complexes in Southern California and Arizona.

The feds say the operation never was profitable, but they did raise a decent amount of cash to pay the investors and themselves by refinancing, as the real estate values continued to climb in the 2000s.

According to the DOJ:

According to the indictment, by the end of 2007, when the real estate market began to decline and credit became scarce, PPA's business model was no longer feasible. As the value of PPA's properties was falling, PPA could no longer raise money by refinancing its properties with increasingly large mortgages. Furthermore, PPA faced large debt payments to its mortgage lenders and private investors, while it was continuing to lose money in its business operations.

To keep PPA afloat, from late 2007 through April 2009, Stewart and Packard allegedly continued to raise tens of millions of dollars from new investors. The defendants are accused of using these new funds to pay earlier investors, mortgage lenders, other company expenses, and Stewart and Packard themselves . . . Moreover, following PPA's final investor offering in 2009, virtually none of the investors' funds were used to invest in new property purchases, as had been promised to investors; instead, the money was used to pay earlier investors and banks, to pay Stewart and Packard, and to pay PPA's bankruptcy attorney.

Federal prosecutors allege they presented false financial information to investors and one of its bank lenders in order to raise money for their "investments," showing everything was looking up.

One of their investments was advertised under the name of "Apartments America," and an online archive of Apartments America's website shows some of the Phoenix-area properties they were claiming to be eyeing, along with big potential returns.

Their alleged scheme pretty much crashed in 2009, when PPA filed for bankruptcy.

A grand total of 647 investors were owed more than $91 million, and no one got a dime through the bankruptcy proceedings, according to the Justice Department. Various banks were owed $100 million, and ended up taking a $24 million loss.

Federal prosecutors also claim that once Stewart and Packard realized they had to go for bankruptcy, they made a transfer of $165,000 from the PPA account to Packard's personal account. Even while bankruptcy proceedings were ongoing, they arranged for another $131,000 to be transferred to outside accounts, conveniently ignoring the whole concept of the bankruptcy process.

Stewart, Packard, and another associate were already hit was an SEC complaint alleging securities fraud in 2012, but the FBI arrested both men today on these new federal charges, including mail fraud, bank fraud, and bankruptcy fraud.